A California appellate court has upheld a
major arbitration award requiring Gibson Dunn to pay retirement benefits to a former partner, marking a
significant development in law firm partnership compensation disputes.
In a recent decision, the California Court of Appeal for the Second Appellate District affirmed a lower court ruling that confirmed an arbitration award in favor of Mark A. Perry, a longtime Gibson Dunn partner who later joined
Weil Gotshal and Manges. The ruling reinforces the limited scope of judicial review over arbitration decisions and underscores how law firm partnership agreements are interpreted in retirement pay disputes.
Background of the Gibson Dunn Retirement Pay Dispute
Mark Perry spent nearly three decades at Gibson Dunn, serving as a prominent appellate litigator. In 2022, he left the firm to join Weil Gotshal and Manges in Washington, D.C., where he continues to lead high-level appellate matters for major corporate clients.
Following his departure, a dispute arose over whether Perry qualified as a “retired partner” under Gibson Dunn’s partnership agreement. The distinction carried significant financial consequences. Under the firm’s compensation structure, partners who meet retirement criteria may receive deferred compensation and retirement pay benefits. By contrast, partners deemed to have simply resigned may not be eligible for those same payouts.
Perry initiated arbitration, arguing that he satisfied the requirements for retirement status under the governing partnership agreement. An arbitrator agreed, concluding that he was entitled to retirement benefits, including an immediate payment of approximately $557,000 and the potential for additional deferred compensation once certain conditions were met.
Trial Court and Appeal
Gibson Dunn sought to overturn the arbitration award in Los Angeles Superior Court, contending that the arbitrator had misinterpreted the partnership agreement and improperly granted retirement status to a partner who had joined a competing firm.
In 2024, a trial court judge confirmed the arbitration award, finding no legal basis to vacate the decision. Gibson Dunn then appealed, arguing that the arbitrator exceeded his authority and that the retirement provisions were intended to discourage partners from leaving for competitors.
The California Court of Appeal rejected those arguments. In its ruling, the appellate court emphasized the narrow grounds available for overturning arbitration awards under California law. Courts generally do not reexamine the merits of an arbitrator’s contractual interpretation, even if one party believes the decision is legally incorrect. Instead, judicial review focuses on whether the arbitrator acted within the scope of the authority granted by the arbitration agreement.
The appellate panel concluded that the arbitrator had authority to interpret the partnership agreement and determine Perry’s retirement status. As a result, the court affirmed the lower court’s confirmation of the award.
Implications for Law Firm Partnership Agreements
The Gibson Dunn appeal highlights broader
issues facing large law firms regarding partner retirement benefits, deferred compensation, and restrictive provisions tied to post-departure competition.
Many major firms structure partnership agreements to balance two competing interests:
- Providing long-term retirement security and deferred compensation to senior partners.
- Discouraging lateral departures to rival firms, particularly in competitive practice areas such as appellate litigation.
This case demonstrates that when disputes arise, arbitration clauses can significantly limit a firm’s ability to challenge an adverse ruling in court. Even in high-stakes compensation disputes involving hundreds of thousands of dollars, appellate courts are reluctant to second-guess arbitrators’ contract interpretations.
For law firm partners evaluating lateral moves, the decision underscores the importance of carefully reviewing partnership agreements, especially provisions governing retirement pay, deferred compensation, and non-compete conditions. The classification of a departure as a “retirement” versus a “resignation” can materially affect financial outcomes.
Arbitration and the Legal Industry
Arbitration remains a common dispute resolution mechanism in law firm partnership agreements. Firms often favor arbitration for confidentiality, speed, and finality. However, as this case illustrates, finality cuts both ways. Once an arbitrator issues a decision, it is difficult to overturn absent evidence of fraud, misconduct, or actions beyond the arbitrator’s authority.
The appellate court’s decision reinforces California’s strong policy favoring arbitration. For
large law firms operating in California and nationwide, the ruling serves as a reminder that contractual drafting and arbitration language carry substantial weight in internal compensation disputes.
What Comes Next
With the appellate ruling in place, the arbitration award in favor of Perry stands. While the firm and Perry reportedly accepted the court’s tentative decision, the case brings closure to a dispute that has drawn attention across the legal industry.
The Gibson Dunn retirement pay case may influence how law firms draft and enforce partnership agreements going forward. Firms may revisit retirement eligibility definitions, post-departure conditions, and arbitration provisions to minimize ambiguity and reduce litigation risk.
For attorneys considering partnership transitions, the ruling highlights the legal and financial complexity surrounding retirement benefits in BigLaw. As lateral movement among senior partners continues to shape the competitive legal market, disputes over deferred compensation and retirement status are likely to remain a significant issue.
In the evolving landscape of law firm compensation and partner mobility, the Gibson Dunn appeal serves as a cautionary tale about the power of arbitration and the enduring impact of partnership agreement language.
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